The tumultuous volatility that plagued the stock market in 2022 has carried right into 2023. With both inflation and interest rates remaining as high as they are today, the continued volatility this year shouldn’t come as much of a surprise, though. And once you add in the recent banking crisis in the U.S., I’d argue that it’s a wonder why both the Canadian and U.S. stock markets are doing as well as they are this year.
The S&P/TSX Composite Index is just above positive territory on the year. The U.S.-based S&P 500 is nearing a 10% gain in 2023 and the tech-heavy Nasdaq Composite is up close to an incredible 20% through the first three months of the year.
As well as the markets have held up this year, I don’t think we’re out of the woods yet. There’s still plenty of short-term uncertainty in the economy, which is why I’m banking on more volatility — at least in the short term.
For those with long-term time horizons, there’s no reason to be on the sidelines right now. With as many discounts as there are available, now is an incredibly opportunistic time for patient long-term investors to put cash to work in the stock market.
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Bracing for more volatility
With more expected turbulence in the markets, building a passive-income stream is one strategy to seriously consider. The income generated can help offset volatility in the short term as well as provide investors with some peace of mind as markets spike up and down.
Fortunately, for Canadian investors, you don’t need to search far on the TSX for a dependable dividend stock. From high yields to century-long payout streaks, there’s no shortage of dividend-paying companies for Canadians to choose from.
I’ve got a renewable energy stock at the top of my list of recommended dividend stocks. There’s far more than just a high yield to like about this company. And as a current shareholder myself, I’ll likely be adding to my position more than once this year — especially while shares continue to trade at a discount.
Brookfield Renewable Partners
At a market cap of close to $30 billion, Brookfield Renewable Partners (TSX: BEP.UN) is a global renewable energy leader. With a broad-ranging portfolio of assets as well as an international presence, this is the perfect company to own to gain well-diversified exposure in the growing renewable energy space.
The company’s dividend is currently yielding above 4%. While a 4% dividend yield isn’t overly difficult to find on the TSX today, finding a company with a yield like that and that can also match Brookfield Renewable Partners’s growth returns certainly is.
Excluding dividends, shares of the energy stock are up more than 100% over the past five years. In comparison, the broader Canadian stock market has returned about 30%.
Despite shares already surging 20% year to date, Brookfield Renewable Partners continues to trade at a discount. The stock is still down 30% from all-time highs set in late 2021. But at this rate, these discounted prices won’t last for much longer.
